Exploring Undervalued German Exchange Stocks With Discounts Ranging From 30.2% to 41.5%

Amid a generally optimistic atmosphere in European markets, with Germany's DAX index recently climbing by 0.90%, investors are turning their attention to potential opportunities within undervalued stocks. In this context, understanding the characteristics that contribute to a stock being labeled as 'undervalued'—such as solid fundamentals at a price below intrinsic value—can be particularly pertinent.

Top 10 Undervalued Stocks Based On Cash Flows In Germany

Name	Current Price	Fair Value (Est)	Discount (Est)
Kontron (XTRA:SANT)	€19.05	€31.25	39%
Novem Group (XTRA:NVM)	€5.60	€10.87	48.5%
technotrans (XTRA:TTR1)	€16.80	€28.47	41%
Stratec (XTRA:SBS)	€45.10	€79.63	43.4%
MTU Aero Engines (XTRA:MTX)	€233.20	€398.70	41.5%
CHAPTERS Group (XTRA:CHG)	€24.20	€44.82	46%
SBF (DB:CY1K)	€3.28	€5.31	38.2%
Your Family Entertainment (DB:RTV)	€2.40	€4.08	41.2%
Redcare Pharmacy (XTRA:RDC)	€116.30	€197.69	41.2%
Dr. Hönle (XTRA:HNL)	€19.50	€33.18	41.2%

Click here to see the full list of 32 stocks from our Undervalued German Stocks Based On Cash Flows screener.

Let's dive into some prime choices out of from the screener

adidas

Overview: Adidas AG is a global company that designs, develops, produces, and markets athletic and sports lifestyle products across various regions, with a market capitalization of approximately €39.75 billion.

Operations: The company generates revenue from several geographic segments, with €5.16 billion from North America, €3.20 billion from Greater China, and €2.31 billion from Latin America.

Estimated Discount To Fair Value: 30.2%

Adidas AG, currently priced at €222.6, is significantly undervalued based on its discounted cash flow analysis with an estimated fair value of €319.01, reflecting a 30.2% discrepancy. The company has recently shifted to profitability with a notable increase in net income from a loss last year to €170 million this quarter and is witnessing earnings growth projected at 41.3% annually over the next three years—substantially outpacing the German market's average. Additionally, Adidas's revenue growth is expected to surpass the market trend, coupled with a high forecasted return on equity of 29.6%.

• In light of our recent growth report, it seems possible that adidas' financial performance will exceed current levels.

• Click here and access our complete balance sheet health report to understand the dynamics of adidas.

XTRA:ADS Discounted Cash Flow as at Jun 2024

MTU Aero Engines

Overview: MTU Aero Engines AG operates in the development, manufacture, marketing, and maintenance of commercial and military aircraft engines and industrial gas turbines globally, with a market capitalization of approximately €12.55 billion.

Operations: The company generates revenue primarily through its Commercial Maintenance Business (MRO) and Commercial and Military Engine Business (OEM), with respective revenues of €4.35 billion and €1.27 billion.

Estimated Discount To Fair Value: 41.5%

MTU Aero Engines AG, valued at €233.2, is considerably undervalued with a fair value estimation of €398.7, indicating a 41.5% potential undervaluation based on discounted cash flow analysis. Despite recent earnings showing a slight decline with net income at €126 million down from €134 million last year, the company's financial outlook remains positive. It is anticipated to achieve profitability growth above the market average in the next three years and expects revenue growth of 12.2% per year, surpassing Germany's market average of 5.2%. Additionally, MTU's return on equity is projected to be high at 20.3% in three years' time.

• The growth report we've compiled suggests that MTU Aero Engines' future prospects could be on the up.

• Navigate through the intricacies of MTU Aero Engines with our comprehensive financial health report here.

XTRA:MTX Discounted Cash Flow as at Jun 2024

SAP

Overview: SAP SE operates globally, offering a wide range of applications, technology, and services, with a market capitalization of approximately €217.22 billion.

Operations: The company generates €31.81 billion from its Applications, Technology & Services segment.

Estimated Discount To Fair Value: 31.1%

SAP SE, priced at €187.44, is significantly undervalued with its fair value estimated at €272.24, reflecting a substantial discount. The company's financial prospects are robust with expected annual earnings growth of 33.5%, outpacing the German market forecast of 18.6%. Despite a low projected return on equity of 16.1% in three years and one-off items affecting earnings quality, SAP's revenue growth forecast at 9.3% annually exceeds the German market average of 5.2%. This positions SAP as an attractive option for investors seeking growth in cash flows amidst recent strategic alliances aimed at enhancing manufacturing efficiencies and integrating advanced technologies like AI across business operations.

• According our earnings growth report, there's an indication that SAP might be ready to expand.

• Unlock comprehensive insights into our analysis of SAP stock in this financial health report.

XTRA:SAP Discounted Cash Flow as at Jun 2024

Summing It All Up

• Investigate our full lineup of 32 Undervalued German Stocks Based On Cash Flows right here.

• Invested in any of these stocks? Simplify your portfolio management with Simply Wall St and stay ahead with our alerts for any critical updates on your stocks.

• Simply Wall St is your key to unlocking global market trends, a free user-friendly app for forward-thinking investors.

Interested In Other Possibilities?

• Explore high-performing small cap companies that haven't yet garnered significant analyst attention.

• Diversify your portfolio with solid dividend payers offering reliable income streams to weather potential market turbulence.

• Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include XTRA:ADS XTRA:MTX and XTRA:SAP.

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